- Efforts to sell Wisconsin-based Shopko are falling through and the rural discount chain is considering a bankruptcy filing, Bloomberg reports.
- "As a matter of company policy, we do not comment on rumor or speculation," a Shopko spokesperson told Retail Dive in an email. A spokesperson for Sun Capital Partners, the retailer's private equity owner, also declined to comment.
- Earlier this week, the retailer confirmed the closure of 39 of its 363 stores, which begin liquidation sales on Friday and will close at the end of February, according to an email to Retail Dive from a company spokesperson.
Shopko has hired Kirkland & Ellis as legal counsel, BRG for restructuring assistance and Houlihan Lokey to explore strategic alternatives, according to a report from Debtwire earlier this week. That was already a sign that bankruptcy could be imminent, according to Erik Gordon, a professor at the University of Michigan's Ross School of Business.
The chain has been buffeted by intense pressures in retail, some perennial and some part of more recent changes in American demographics, the economy and innovations like e-commerce spurring new customer expectations. Experts also fault the tendency of private equity owners to burden businesses in their stables with debt, leaving them little room to respond to such disruption.
"Retailers don't do well with leverage, so [private equity] or anything else that piles debt on a retailer creates a lot of risk," Gordon told Retail Dive in an email. "But employees and managers who have been mediocre in an industry that requires excellence like to blame anyone but themselves when they fall too far behind the competition to catch up. PE and Amazon are the usual targets," he said.
Meanwhile, retailers that do respond well to new aspects of competition leave less nimble rivals like Shopko even further behind. Legacy retailers like Target and Walmart, for example, have overhauled their e-commerce operations and leveraged their store fleets to blur channels and meet new expectations, turning tables on Amazon but making it that much harder for the likes of Shopko to keep up.
"The order and pickup story will continue to develop," Gordon said. But while omnichannel services may be evolving into an expectation, they're expensive. "It is easy to do something in order and pickup, but it probably won't be easy to get the service level right at the same time you get the cost level right."